New Jersey Sells $350 Million of Bonds to Bank of America

New Jersey sold $350 million of new-
money general-obligation debt with Bank of America Merrill Lynch
the winning bidder and 10-year debt priced to yield 1.89
percent, data compiled by Bloomberg show.

New Jersey, the 11th most-populous state, received eight
bids. The borrowing sold at a premium, with Bank of America
paying the state $399 million to buy the debt and New Jersey
obligated to repay $350 million, according to the Treasury
Department.

“It’s a nice vote of confidence for New Jersey as a strong
credit with a long history of responsible management,”
Treasurer Andrew Sidamon-Eristoff said in an interview in
Trenton.

Yields on the 10-year debt were 0.15 percentage point above
an index of benchmark municipals, Bloomberg data show. That’s
less than half the 0.34 percentage point yield penalty the state
incurred when it priced 10-year debt in December 2009, its last
new-money general-obligation sale, according to Bloomberg data.

Bank of America submitted the winning bid with a true
interest cost of 2.737 percent. True interest cost is an
underwriter’s bid that represents the total cash amount of
interest payments and the timing of interest and principal
payments.

New Jersey, which has the third-highest per-capita income
among U.S. states, last refinanced general-obligation debt in
September 2010, with 10-year yields 0.61 percentage point above
top-rated municipals.

New Jersey had the second-highest tax burden among U.S.
states in 2010, following New York, according to the Tax
Foundation, a Washington-based research group that advocates a
simpler tax code.